The most common question I get on the first call is some version of “what would you pay?” The honest answer is that it depends on the house, but you don’t have to wait for a buyer to tell you. With a little homework you can build a realistic range on your own, which makes it much easier to tell a fair offer from a lowball.
I’m Evan Weissman, and I make cash offers on houses all over Maryland. In this article I’ll show you the numbers I look at, the ones that tend to mislead sellers, and a simple way to sketch your own estimate before anyone walks through your door.
Two different values
There are really two numbers in play.
The first is what your house would sell for to a typical owner occupant buyer using a mortgage, after it’s in good shape and on the market. Appraisers and agents call this market value. Investors often call the post-renovation version the after repair value. For the as-is value of a house in Parkville or Carney, see how I buy houses in Parkville.
The second is what a cash buyer will pay for the house as it is today, with no repairs, no showings, and a settlement date you choose. That number is lower, because the buyer takes on the repairs, the risk, the holding costs, and the cost of selling again.
Your goal is to estimate both, because the gap between them tells you whether a cash sale makes sense for you.
Numbers that tend to mislead
Before building your estimate, set aside a few figures that confuse a lot of sellers.
Your SDAT assessment. The State Department of Assessments and Taxation reassesses Maryland properties on a three year cycle, and the assessment is meant for tax purposes. It can lag the market, and it’s based on limited information about the inside of your house. It’s not a sale price.
Automated online estimates. They work off public records and recent sales, but they can’t see your 1970s kitchen, your leaking roof, or the new HVAC you put in last year. They’re often off in both directions, especially for older houses and unusual properties.
What a neighbor’s house sold for. Useful, but only if it’s truly similar: same style, similar size, similar condition, and recent. A fully renovated house down the street tells you what yours might be worth after a renovation, not today.
Step one: estimate the repaired value
Start with the closest comparable sales you can find. If you know a local agent, ask them for recent closed sales nearby. Look for:
- Sales within the last several months.
- Houses of similar size, age, style, bedroom and bathroom count.
- The same neighborhood or a close match, ideally without crossing a major road or school boundary.
- Houses that were updated or in good condition when they sold.
The middle of those sale prices is a reasonable estimate of what your house might bring after it’s fixed up and marketed.
Step two: estimate repair costs honestly
Walk through your house as if you were buying it. List what a buyer using a typical mortgage would expect fixed, and what an investor would replace to reach the condition of those comparable sales. Common big items in Maryland houses:
- Roof replacement.
- Furnace, heat pump, or central air.
- Electrical panel or wiring updates.
- Kitchen and bathroom updates.
- Windows, flooring, and paint throughout.
- Foundation or basement water issues.
- Septic or well problems outside public water and sewer.
Get real quotes for the big items if you can. Sellers tend to underestimate repair costs, and buyers tend to estimate on the high side to protect themselves. The truth is usually somewhere in between.
Step three: account for what it costs to buy, hold, and resell
A cash buyer pays costs you may not think about. They pay their share of transfer and recordation taxes going in, carry the house during the renovation with taxes, insurance, utilities, and financing costs, then pay commission and closing costs again when they resell. Those costs add up to a meaningful share of the resale price. My Maryland transfer and recordation tax article covers the tax piece.
Step four: leave room for risk and profit
Any investor needs a margin. Renovations go over budget, hidden problems turn up behind walls, and markets shift during a project. Some investors use rough rules of thumb to set an offer, but in my experience the real number depends on the size and type of the project. A light cosmetic job carries less risk than a full gut, and the offer should reflect that.
Putting it together
Here’s the rough math, written out:
- Start with your estimated repaired value.
- Subtract the realistic repair cost.
- Subtract buying, holding, and resale costs.
- Subtract a reasonable margin for risk and profit.
What’s left is roughly the range a fair cash offer should land in. If an offer comes in far below that, ask the buyer how they got there. A serious buyer should be able to walk you through their repair estimate and their view of the repaired value. My article on why cash offers are lower than list price explains the gap in more detail.
Then compare it to listing
The cash number only means something next to the alternative. Estimate what a listing would net you:
- Expected sale price in current condition, or after the repairs you’d actually make.
- Minus commission and your closing costs.
- Minus the cost of any repairs or credits.
- Minus months of mortgage, taxes, insurance, and utilities while it’s on the market.
If the listing net is well above the cash number and you have the time and money to see it through, listing is probably the better path. If the gap is small, or the repairs are big, or time matters, cash may come out ahead. My net sheet guide shows how to lay both columns out, and when a listing beats a cash offer walks through the situations where I’d tell you to list.
What can raise or lower a cash offer
A few things move offers more than people expect:
- Title problems, like unreleased mortgages or estate issues, add time and risk.
- Tenants in place can raise or lower the number depending on the lease and the buyer.
- Unpermitted additions may need permits or removal.
- A flexible settlement date can help, since buyers plan projects around timing.
- Clear information about known problems usually helps, because uncertainty costs money.
How accurate is my SDAT assessment for selling?
It’s a tax figure on a three year cycle and doesn’t reflect your interior condition or current market. Use it as background, not as your price.
Why is a cash offer lower than what my house could sell for?
The buyer pays for repairs, holding costs, resale costs, and takes on the risk of surprises. In exchange you skip repairs, showings, and the uncertainty of a financed buyer.
Should I get more than one cash offer?
It’s reasonable to compare. Look at the terms as well as the price: who the buyer is, the deposit, inspection periods, and whether the contract can be assigned.
Can a cash offer be close to market value?
When a house needs little work and is in a strong area, the gap can be smaller. In those cases a listing often nets more, and a good buyer should say so.
Talk through your situation
If you’d like a second set of eyes on your own estimate, call or text me at (410) 498-7473. I’ll show you my math line by line so you can compare it against yours.